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A Simple Guide to Setting Up a Non-Medical Home Care Business

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If you are thinking about starting a home health care business, there is a choice of medical and non-medical in-home care. Medical care at home is administered by a licensed medical professional such as a physical therapist or nurse. The senior’s physician prescribes medication, pain management, wound care, mobility training, IV therapy and other tasks for medical home health aides to follow.

Non-medical in-home care does not require licensed medical professionals as it is intended to assist senior clients with activities of daily living such as bathing, using the toilet, meal preparation, medication reminders, transportation and companionship. Professional caregivers who don’t hold a medical license can work as non-medical home health aides.

A growing demand for non-medical home care agencies

By 2030, one in five Americans will be aged 65 years or above. [1] The number of people 85 years or older, who typically require additional caregiving and support – will increase to 21% in 2050. [2] Most want to age in place: 87% of adults aged over 65 years prefer to stay in their current home and community as they advance in years. [3]

Home care is more personal and comfortable compared to a nursing home. Seniors who wish to remain independent seek in-home care as it is more affordable than out of home care. The national average for non-medical in-home care is $21/hr. In contrast, skilled nursing home care costs $227/day for a shared room, although state averages range from $145/day to $800/day. Adult day care centers cost $72/day on an average. [4]

Setting up a non-medical home care business

Check for licensing requirements

States have their own licensing and registration requirements for non-medical home care services. For example, if you are based in Illinois, the Illinois Department of Public Health requires that you obtain a license to open, manage, conduct or maintain a home services agency in the state. The Department will review your licensing application and contact you if revisions are needed. After approval, the Department will schedule an on-site survey. The entire application and licensing process may take up to six months.

Determine your business structure

One of the biggest decisions you will make is deciding the appropriate corporate structure for your business. Your attorney will help you make an informed decision based on numerous factors including and not limited to taxes, liability, investor opportunities and partnerships. It is imperative that you get legal counsel prior to selecting your business entity.

LLC, S-Corp, partnership, C-Corp each have their advantages and drawbacks, but one will align best with your business objectives. If you plan to work in the business and don’t wish to bring partners into the business, then an S-Corp will likely work well. On the other hand, if you won’t be working in the business and need investment, an LLC may be suitable. Note that this is general information and not professional legal advice.

Once the entity is selected, revising it is complicated. So, choose wisely ONLY after consulting your lawyer.

Note the competition

The success of your business will depend on the extent of requirement for your services in the area you plan to serve. Are there a good number of households with potential clients who are in need of non-medical home care? Study the competition in the area: is it overserved by home health agencies or are there very few or no competitors? If the area you have in mind is already buzzing with non-medical home health businesses or its demographics suggest a lack of demand for your services, pick a different area.

Ensure you have sufficient working capital

In the crucial start-up phase of any business, the owner must have adequate working capital to run operations. A non-medical home health business with non-skilled employees should have $40,000-$80,000 (licensed home health care agencies that don’t accept Medicare will require $60,000 to $100,000 while Medicare-certified agencies will need over $150,000 in working capital). While it is easier to start a non-medical home health business from a funding perspective, you may not have the money for it or prefer external funding.

You can secure financing from a commercial bank. Banks or any alternate source of funding will require you to present a business plan containing your mission, services, budgeting, expected income and the key details that go into a business plan to secure funding.

Research federal and state grants available to businesses offering home health care services. The grants are administered to different agencies and can be accessed on government websites, such as Grants.gov. Federal Grants Wire is another free resource listing federal grants, government grants and loans.

Purchase the necessary insurance

Liability or malpractice claims can be devastating for a home health business. Even in cases where plaintiffs have no evidence to back their claims, you may still need to pay towards some of the ‘damages’ suffered. General liability insurance covers slips, falls and property damage at the client’s premises. Inability to understand and comply with patient needs can also create grounds for a lawsuit. Failure or carelessness in preparing meals for an allergic patient may attract professional liability claims.

Non-medical home health agencies need to safeguard against data breaches, wherein clients’ personally identifiable information is susceptible to hacking, particularly in the absence of a strong cybersecurity framework. A basic cyber liability insurance policy offers a financial cushion in the event of a data breach. Check out this source for more information on general liability, professional liability and cyber insurance.

Hire staff

As non-medical home care aides don’t require a license to practice or the kind of credentials that medical professional need, your choice will come down to their personality and characteristics. Experienced caregivers with good employer or client testimonials will support your business, but aides with one years’ experience working directly with an elderly client in a professional capacity may also deliver excellent care, other attributes considered.

Applicants should have a GED or high school diploma, basic computer skills, a valid driver’s license with a blemish-free DMV record, a drug-free lifestyle and provide at least three personal references. Conduct a background check to ascertain if the applicant has a previous felony conviction. Federal and state databases will easily offer insights on applicants’ criminal history, if any. Formerly incarcerated individuals needn’t necessarily be less reliable than counterparts with no criminal record. Assess the hiring policies of non-medical home health agencies in your city for ideas.

Note that federal regulations guarantee minimum wage and overtime protection to America’s home health care workers. [5] Your attorney should guide you regarding wage and other employment-related matters.

  • State what the home health aide is expected to do in clear terms. List the specific responsibilities and requirements of the job to attract relevant candidates.
  • Advertise job openings in multiple locations online (job boards, website) and offline (flyers, brochures)
  • Your job openings will inevitably attract qualified and unqualified applicants. Either you or your partner can screen each application and schedule interviews. A single person in-charge/point of contact should ideally peruse objective and subjective criteria rather than three or four employees. That being said, all perspectives on the ideal candidate can be considered prior to the recruitment drive.
  • Being a new business, you may not have many selling points. Still, you should highlight your USP unambiguously and explore ways to position your business compellingly before aspirants.

Differentiate your business

Stand out from the competition by marketing effectively to your audience. If there is a senior community in your area, place an ad in their monthly newsletter or post a flyer in the community hall. Seniors’ older kids should also be your target audience. This group is likely to be internet-savvy and research home health agencies online. A professionally-designed website and a social media presence (ex: join relevant Facebook groups) are imperative in today’s age.

Also claim your local listing on Google to be searchable to local clients. Network with physicians, rehabilitation centers, elder law attorneys, churches and geriatric care managers. Many of your referrals will come from word-of-mouth marketing by trusted individuals and organizations. If you are already actively involved in your community, then you should be able to build sales and marketing traction without difficulty.

If you can afford one, consider hiring a home care consultant who can guide you through your business journey, from assisting with your business plan through to marketing and promotions. View all aspects of business through a strategic lens to make effective early decisions that create a good foundation for business growth.

1 https://www.aarp.org/livable-communities/info-2014/livable-communities-facts-and-figures.html

2 https://www.census.gov/prod/2010pubs/p25-1138.pdf

3 https://www.aarp.org/livable-communities/info-2014/aarp-ppi-survey-what-makes-a-community-livable.html

4 https://www.payingforseniorcare.com/longtermcare/costs.html

5 https://www.thenation.com/article/homecare-workers-are-now-protected-by-minimum-wage-laws/

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